Cash Management for SEH clients
The UK financial system is in a state of upheaval thanks mainly to the Global Financial Crisis. Our advice to all our Hub Clients remains consistent and includes the following:- Keep your banker and financial partners up to date with news about your company. This done best by personal contact but phone updates works as well.
- Maintain a current business plan in line with company developments and expectations. Almost any detailed conversation in financial terms needs a reference to a business plan.
- Pay daily attention to your cash flow using your own financial systems. This includes calls to debtors to ensure accounts are collected in line with your terms and conditions. The squeaking wheel gets the grease!’
- Apply your terms and conditions effectively paying attention to the following;
b) bill daily for goods and services
c) communicate as needed with clients to resolve any misunderstandings
on a timely basis. In all these matters, keep to the principle of “no
surprises” for all your communications.
- Where practical start all negotiations for renewals or extensions of funding on a timely basis. These discussions always take longer than you might anticipate.
Overdrafts
Whilst the banks remain under pressure from the government to reduce interest rates, we hear of numerous reports where they are attempting to withdraw or cancel overdraft arrangements (remember overdrafts are always repayable on demand).
Typically the initial attitude of the bank is to write to the customer stating the overdraft will be withdrawn in, say 10 days, unless a suitable proposal is made.
This is the opportunity for the customer to offer to reduce the overdraft by say £1000 per month until the total has been repaid. Clearly this will reduce the limit of cash resource available but it allows time to reduce the facility in a planned and more acceptable timeframe.
Experience shows that many banks find this proposal to be acceptable as they can see their exposure being reduced in a controlled environment.
Malcolm Loucks & Bryn Edwards
November 18th 2008
Contact:
Haley Dwyer
Email: haley@surreyhub.co.uk
Publish Date: 18th November 2008